Fierce lobbying counters White House push for food aid reform

WASHINGTON (Reuters) - A White House plan to modernize the major U.S. food aid program, by donating cash rather than American-grown food, is in trouble after fierce lobbying by farm groups, food processors, shippers and others who set out to sink the idea months before it was unveiled in President Barack Obama's fiscal 2014 budget.

The administration, which needs congressional approval to make the changes, is discovering that only a few lawmakers are prepared to publicly support the effort to send cash abroad to make the distribution of aid faster and more efficient.

They are outnumbered by lawmakers from both parties who want to kill the initiative or water it down substantially, based on letters sent to the White House and comments made at recent congressional hearings. In one letter 21 senators, including two key committee chairwomen, opposed the changes.

The administration's proposed changes, rolled out last month, have already been diluted.

The White House had hinted it wanted to convert aid entirely to cash donations. Instead, its fiscal 2014 budget proposal said that at least 55 percent of aid spending, or nearly $800 million of the $1.4 billion requested, would be earmarked to buy and transport U.S.-grown food.

It would still be the biggest change since the Food for Peace program was created in a mixture of Cold War "soft" diplomacy, compassion for suffering overseas and a practical use of farm surpluses. For six decades, U.S. food aid has meant shipping U.S.-grown goods thousands of miles to hunger spots. Other major donors have switched to cash donation.

Lawmakers were bluntly skeptical of the administration's plan, which was a response to some aid groups' assertions that using U.S. cash aid to buy food overseas would allow more needy people to be fed than if the United States continued to send food rather than cash.

"I don't think that's going to get done," Nebraska Republican Senator Mike Johanns told Secretary of State John Kerry at a hearing days after the administration's new aid formula was proposed. Agriculture Secretary Tom Vilsack heard a similar message at a House appropriations hearing.

The criticism reflected not only the challenge the White House faces in altering the aid formula, but also the fact that its aid plan faces an uphill struggle for action at a time when Congress is focused on deficit reduction and overhauling the nation's immigration laws.

Congress could resolve the issue as soon as May or June, when it writes the annual funding bills for food aid and other agricultural programs. The long-term farm policy bill, another avenue for food aid reform, is scheduled for drafting in May.

CRITICS OUT EARLY, OFTEN

Opponents of the White House plan were in touch with congressional heavyweights as early as February, when word of the proposal leaked out.

Those leading the charge have included groups such as the Alliance for Global Food Security, which is made up of several aid organizations, and major commodity groups.

Opponents made contact with key lawmakers by soliciting meetings, writing letters and encouraging constituents to press their case - often by citing the U.S. jobs that could be lost if the aid's focus was shifted away from sending food.

A coalition letter to Obama had more than 70 signatories including agricultural, maritime and logistics groups, aid organizations and individual companies.

Another letter was sent in March to the leaders of nine congressional committees including those overseeing agriculture, foreign affairs, appropriations and budget in the U.S. House and Senate.

The letter lauded the "transparency, accountability and reliability" of the current system - essentially a suggestion that limiting aid to cash could invite corruption. The letter also noted that the current aid program provides jobs to those who grow, package and ship food.

Lorena Alfaro, the American Soybean Association's representative, said soybean farmers who visited the capital in March met with congressional aides on various policy issues, including food aid, and will raise similar concerns again if necessary.

ADMINISTRATION PUSHES EFFICIENCY

In pressing the case to shift more aid to a cash system, the White House and the U.S. Agency for International Development have highlighted the potential ability to feed up to 4 million more needy people each year at a lower cost. Several major aid groups, including Oxfam America and CARE, favor such changes.

Groups that support reform say it is generally better to buy food locally, thereby supporting local farmers and cutting out the cost of shipping food around the globe.

The administration says its plan would also clarify what has become a jumble of programs. Food for Peace is funded through USDA but run by the State Department, which operates other humanitarian programs.

But the proposed savings - $500 million over a decade - are too small to pique the interest of congressional budget hawks, especially when stacked against the vocal complaints about the potential loss of jobs and markets for U.S.-grown food.

Under the White House plan, cash could be used for food vouchers or to buy food locally in needy areas. In dangerous places, "these more flexible tools are invaluable," said Rajiv Shah, the head of the USAID and an Obama appointee.

The Food for Peace program is focused on emergency hunger relief, meaning famine, broad-scale food shortages, provision of aid to refugee settlements in war-torn regions, and so on.

Some 1.44 million tons of food were shipped last year. Among the largest recipients of aid were Ethiopia, Sudan, Kenya and Pakistan. Shippers have a vested interest in keeping aid tonnages high, because at least half of such shipments must be carried on ships sailing under the U.S. flag.

Government spending of $1 billion or so a year to buy food for donation - typically rice, vegetable oil, flour, lentils, dry beans, a corn-soy blend, bulgur and dried peas - pales next to U.S. farm exports worth some $145 billion this year.

Commodities shipped under the Food for Peace program "currently account for less than two tenths of one percent of U.S. agricultural production and about one half of one percent of U.S. agricultural exports," the White House estimated.

"Exports via food aid are a small drop in the market," said Veronica Nigh, an economist with the American Farm Bureau Federation. "Our concern is less about decreasing an important revenue stream for U.S. agriculture. It's more about the loss of a sense of pride."

(Reporting By Charles Abbott and Patrcia Zengerle in Washington and Karl Plume and PJ Huffstutter in Chicago; Editing by Ros Krasny and Claudia Parsons)